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Page 1 of 3 Treasury investment in banks misunderstood,
executives say | Milwaukee Journal Sentinel February 21, 2009
I N T H E N E W S
When news spread that Manitowocs Bank First Nationalwas
receiving $12 million in so-called Troubled AssetRelief money from
the federal government, some peoplefamiliar with the bank were
puzzled.
We had customers calling and saying, Youve alwaysbeen a strong
bank. Why would you take this moneysaid Lisa ONeill, chief
financial officer for the bank.
There has been a real awareness campaign to say wewere offered
this money because we are a well-runinstitution.
Confusion about the Troubled Asset Relief Programspans far
beyond Manitowoc.
For more than a few reasons, starting with an early shiftin
priorities by the officials running it, TARP has becomeone of the
most misunderstood and controversial parts ofthe federal
governments effort to revive the economy.
Originally intended to stabilize the financial system bygetting
troubled loans and investments off the booksof important banks, the
program quickly evolved intocapital injections to strengthen banks
of various sizesaround the country. The infusions of taxpayer
money,in which the Treasury buys shares of preferred stock inbanks
that win its approval, were meant to let banks buildcapital and, in
turn, increase the flow of financing tobusinesses and
consumers.
But the quick switch in strategy for the program, whichalready
had been labeled a bailout in the media,muddied perceptions and
stirred doubts about whether
the government had figured out how to handle thefinancial
crisis. Further complicating matters werestatements by the Treasury
saying the money wasdirected to healthy banks, even though some
bigtroubled ones, such as Citibank, were major recipients.
Add to that the cries by Congress that participating banks
arent making enough loans and reports of extravagancesby some
banks receiving the money, and its easy to see
why people are scratching their heads about TARP.
Wisconsin recipients
So far eight Wisconsin-based banks have receivedfunding via
TARP. Despite public and congressionalmisgivings about whether its
working, most of the
Wisconsin banks say it is having or will have animpact.
Milwaukees Marshall & Ilsley Corp. said that from time
itreceived $1.7 billion in government capital Nov. 14 untilthe end
of December the most up-to-date figures thebank has made public
M&I entered into roughly $1.3billion in new credit throughout
its markets.
Treasury investment in banks misunderstood,executives
sayMilwaukee Journal Sentinel February 21, 2009
Paul Gores Text
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I N T H E N E W S
We would expect to do what the Treasury would loveto see banks
do, and thats multiply that $10 million
investment into $80-$90-$100 million in additional loansand
investments.
Some of the big banks in the first wave of TARP awards none was
from Wisconsin reportedly signed on onlybecause of arm-twisting by
federal officials who talkedof saving the financial system. Since
then, regulatorshave encouraged many other banks to apply for
thefunding. So far more than 400 have taken the capital.
Butaccepting TARP money comes with potential hazardsother than
limits on compensation.
Associateds Beideman discovered that when a publicuproar
occurred after the Journal Sentinels Dan Bicereported this month
that the bank was planning toreward 100 top-achieving employees
with a trip to aplush resort in Puerto Rico. The bank canceled the
tripin response to the criticism, although it said no taxpayerfunds
would have been used for it.
The unfavorable reaction here almost certainly washeightened by
previous reports of travel, opulentexpenditures and big bonuses by
executives of othernational banks that had received TARP funds.
Said Blackhawks Bastian: Its one of those things wherepeople are
asking me whether Im buying an airplanewith the $10 million or how
much of that is going towardmy office or how much is going toward a
bonus. Not onepenny of it.
Treasury investment in banks misunderstood, executives say |
Milwaukee Journal Sentinel February 21, 2009
